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Services PMI contracts as GST hits demand Services, the biggest sector of the Indian economy, contracted in November because of the goods and service tax (GST) affecting demand, shows the widely tracked Nikkei purchasing managers´ index (PMI). The PMI fell to 48.5 points in November from 51.7 in the previous month.The November reading is the lowest since August A reading above 50 points denotes expansion and one below that is contraction.This implies that the country´s growth story will take time to pick up significantly after economic expansion did rise to 6.3 per cent in the second quarter, from 5.7 per cent in the first one. Even then, the Reserve Bank of India might not cut its policy rate on Wednesday because input prices are rising.However, the employment situation gave relief as jobs rose in the services sector.“Business under performance emanated from the GST, which contributed to sluggish demand andalower customer turnout, according to an ecdotal evidence,” said Aashna Dodhia, e…

GST data may be used to track income tax evaders The government may be looking to use data obtained from Goods and Services Tax (GST) filings to track those who are escaping income-tax, two people close to the development said.The government is setting up a mechanism wherein data obtained through GST reporting could be correlated with the income-tax filings. While the project is still in the initial stage, the government wants to create a database whereby income of companies and their promoters could be matched with that of the tax returns filed, said a person in the know.It is still unclear whether the government would use this data to dig out tax evasions in the earlier years or whether this will only be for prospective tax scrutiny. Unlike the earlier tax regime, GST leaves a trail, especially for the business of size, and it becomes hard to underreport income or exaggerate expenses.Industry trackers said tax officers don’t have to go through the sea of data to make sense as big data …

Jaitley kicks off prebudget talks with unions and farmer groups Finance minister Arun Jaitley met trade unions and farmers groups on Tuesday, starting the process of pre-Budget consultations with key stakeholders.Jaitley said to achieve the goal of doubling farmers’ income by 2022 there was need to improve storage and marketing facilities for agri produce so that farmers get better price, a statement issued by the finance ministry said. He said there was need for water conservation, incentivising agro processing and balanced use of fertilisers in order to ensure higher agriculture productivity.Farmers groups suggested that India has constantly pursued ‘Food Policy’ and Budget 2018-19 is an opportunity to shift to ‘Farmers’ Policy’. There is need to reduce pressure on the land by creating off-farm jobs, they suggested according to the finance ministry statement. A ‘Price Deficiency Payment Mechanism’ was suggested for those crops where procurement cannot be ensured to provide more remuner…

RBI builds Rs 31 bn forwards position as dollar tide rises The Reserve Bank of India (RBI) has built upa Rs 31billion position in rupee dollar forwards as a continuous foreign fund inflow has necessitated active intervention by the central bank in the spot market.Forwards contracts are designed to buy foreign currencies at preagreed prices. A buyer has to payafee, the forward premium, for the right to buy at that price.Economists and currency dealers said the RBI action could also beaform of insurance against an outflow of dollars as central banks around the world had begun normalising their easy money policie In August and September, the markets witnessed outflows from the equity markets, highlighting the need to remain cautious on funds flow.Foreign investors brought Rs 31.33 billion into India in 2017, of which Rs 22.6 billion has moved into debt This is almost equivalent to the RBI´s net forward position of Rs 31.13 billion, as of September.Of this, Rs 3.44 billion matures within mon…

FMCG companies brace for new set of GST challenges It is the sixth month since the country´s biggest tax reform after independence was implemented.And just when consumer goods companies were managing to come over the initial hiccups emanating from the goods and services tax (GST), new pain points have emerged The biggest is the issue of antiprofiteering norms.Simply put, these are the rules to prevent companies from making excessive profits from the GST. While anti-profiteering provisions were cleared in June, just before the GST rollout, no clear guidelines have been specified to date on how the calculation should be done. Companies that Business Standard spoke to say they are awaiting a proper frame work to determine what constitutes profiteering and what doesn´t.The reason they said they would wait is because there is growing speculation of a likely product specific approach to anti-profiteering as opposed to a company specific approach In other words, the anti-profiteering body, set u…

Central govt counts on divestment to deliver A sit tries to meetatight fiscal deficit target for 201718, the government hopes that the proceeds from disinvestment would not only be met but exceeded, by as much as Rs 20,000 crore.This will compensate for some of the expected short fall in other revenue heads, officials have told Business Standard.

The divestment target for FY18 is Rs 72,500 crore, the highest fixed so far for any year.After successful launch of the government´s Bharat22 exchange traded fund last month, the proceeds so far are Rs 52,500 crore, already ahead of 201617´sRevised Estimate of Rs 45,500 crore.

The finance ministry´s department of investment and public asset management has options (Dipam) which, it is hoped, will take stake sale proceeds even beyond Rs 90,000 crore.“We are sure the target will be met. Given the pipeline of stake sales Dipam is working on, it could be exceeded comfortably,” said an official involved in the Budget making process.

CBEC calls for reality check to boost GST mop-up Amid concerns over slowing goods and services tax (GST) collections, the Central Board of Excise and Customs (CBEC) has sought detailed field reports with a special focus on the top taxpayers.Finance secretary Hasmukh Adhia will review the revenue position with senior officials in the department on December 9. Field officers have been asked to submit a detailed analysis comparing tax payments, before and after GST was imposed, of the top 100 taxpayers in their jurisdictions as the government seeks to understand the reasons for collections slowing. The officials have been authorised to contact the assessees personally or even visit their premises. India’s GST collections in October fell to Rs 83,346 crore from a high of over Rs 92,000 crore in September. Moreover, the Centre’s share has been low after payment of compensation cess to states. The total central GST collection in the first four months of the new tax — July, August, September an…